Punjab National Bank (PNB) has shut its Hong Kong branch, is on track to recover Rs 32,000 crore from bad loans this fiscal and has shortlisted Rs 20,008 crore of stressed assets to move to the NARCL, its managing director and CEO Atul Kumar Goel said.

The state-owned bank has shuttered its Hong Kong branch and disposal of its major assets and liabilities, the seed capital and accumulated profits have been repatriated.

“The regulations in Hong Kong are very stringent so we had to shut our branch there. Around Rs 252 crore has been repatriated from the Hong Kong branch. Most of the public sector banks have shut down operations in Hong Kong,” said Goel.

PNB is on the right track and will definitely be able to achieve the recovery target of Rs 32,000 crore for the current financial year, Goel said. The bank has already recovered Rs 15,621 crore from bad loans in the first six months of the current fiscal. "In the June quarter, we have recovered Rs 7,057 crore. In the September quarter, the total recovery was Rs 8,564 crore," he added.

The bank has identified 62 loan accounts with outstanding of Rs 20,008 crore which it would refer to the National Asset Reconstruction Company Ltd (NARCL).

For the first phase, the bank has identified nine accounts amounting to Rs 2,752 crore. In the second phase, the bank would move out 11 accounts worth Rs 2,685 crore. Out of the first phase, Rs 2,752 crore in five accounts, NARCL has given the offer where PNB has an outstanding of Rs 1,099 crore," Goel told reporters.

PNB’s net profit for the fiscal second quarter ended September stood at Rs 411 crore, down 62.8% from the year-ago period but up 33.4% from the preceding quarter. The dip in net profit was mainly due to higher provisioning towards bad loans.

The bank's provisioning for Q2FY23 rose to Rs 3,556 crore versus Rs 2,693 crore a year ago.

 The bank’s gross non-performing assets (NPAs) fell to 10.48% for the quarter ended September 2022, from 13.63% a year ago. Sequentially, this was at 11.27%.

 The net NPA declined to 3.80% from 5.49%.

 “There were no surprises on the asset quality front. There were a lot of ageing provisions which we have taken care of and all the bulk accounts are now adequately provided for. Going forward, we will only have smaller additions,” said Goel.

Fresh slippages during the first half of the fiscal ending September declined to Rs 9,606 crore from Rs 13,299 crore for the same period a year ago. For Q2FY23, it was down at Rs 5,301 crore versus Rs 7,620 crore.

The bank wrote off Rs 2,614 crore of loans during the September quarter. The cash recovery and upgradation during the quarter was Rs 6,497 crore.

“Fresh additions to the NPA pile were from agriculture (Rs 2,785 crore), MSME (Rs 1,597 crore) and retail loans (Rs 623 crore),” Goel explained.

PNB’s total income in the September quarter increased to Rs 23,001.26 crore as against Rs 21,262.32 a year ago. Interest income also climbed to Rs 20,154 crore from Rs 17,980 crore.

The bank’s advances grew 12.84% to Rs 8,30,212 crore. While retail advances grew 17% year-on-year to Rs 1.6 trillion, the corporate portfolio rose 14% to Rs 3.7 trillion.

The share of RAM (retail, agriculture and MSME), which grew 8.85%, is 53.5% of the total loan portfolio. In retail credit, the housing loan segment grew 7.8% YoY to Rs 76,877 crore. Vehicle loan rose 35.3% to Rs 14,038 crore. The personal loan portfolio grew 36.4% over the previous year to Rs 14,294 crore.

The deposits of the bank grew 7% to Rs 11,93,501 crore. CASA (current account savings account) share stood at 44.91% of domestic deposits as on 30 September 2022. This was at 45.42% a year ago.

PNB is looking to clock a credit growth of 13% this fiscal. “Deposits for the system as a whole has been lagging behind credit growth. We have excess SLR (Statutory Liquidity Ratio (SLR) of Rs 50,000 crore, but we will also look at higher deposit growth,” Goel said.